The Smart Money Is Bullish On These 5 Dividend Stocks

#1 AT&T Inc. (NYSE:T)

Number of Hedge Fund Holders (as of September 30): 60
Total Value of Hedge Fund Holdings (as of September 30): $3.76 billion
Hedge Fund Holdings as Percent of Float (as of September 30): 1.90%

AT&T Inc. (NYSE:T) is America’s second largest wireless carrier and a must-have for any dividend portfolio. With a dividend yield of 5.59%, a quarterly dividend of $0.47 a share, a payout ratio of 0.696, and a track record of 30 straight years of dividend increases, AT&T’s dividend is as secure and as attractive as any company’s on the market today. AT&T has been able to grow its dividend so consistently because the company has a wide moat. It takes a lot of capital to buy spectrum licenses from the government to operate and to build the infrastructure needed to offer competitive services that customers want. It also takes a lot of time for a new entrant to garner enough market-share to break even. Many wireless/broadband customers are locked into multi-year contracts that make it difficult to impossible for a new entrant to take until their contracts expire. AT&T Inc. (NYSE:T)’s dividend has increased by an average annualized rate of 2.3% over the past five years and could rise as fast as 5.85% a year over the next five years if management increases the dividend in line with the company’s expected average EPS growth rate. AT&T also has more than $2.5 billion of annual synergies from its DIRECTV acquisition that it hopes to unlock by 2018 that would increase the dividend further. Given AT&T Inc. (NYSE:T)’s favorable qualities, it’s not surprising that 60 elite funds were long the stock at the end of the third quarter, up from 49 funds long the stock at the end of June.

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